Crystal Cathedral plan: Lease its way out of debt

In a bid to rescue itself from bankruptcy, the Crystal Cathedral plans to sell and lease back the landmark to an Irvine real estate partnership.

Crystal Cathedral Ministries filed a reorganization plan late Friday, seven months after it filed for protection from its creditors under Chapter 11 of the federal bankruptcy law.

Greenlaw Partners would pay $46 million for the cathedral and surrounding buildings, leasing back the cathedral to the ministry. Most of the cash would go to creditors.

After four years, the ministry would have the right to buy back the cathedral, parking lots and most other buildings for $30 million. Greenlaw would get the right to build apartments on some of the 30-acre property.

The plan is subject to approval by the cathedrals' creditors.

They've been skeptical. Just days ago, a financial consultant to the creditors said in a statement filed in U.S. Bankruptcy Court that if the ministry hadn't been protected by bankruptcy rules, it would have burned through $2 million in cash in the past six months.

The key to the plan is real estate development. Greenlaw wants to build apartments – potentially hundreds of apartments – on what are now parking lots, low-slung buildings and lawns near the corner of Lewis Street and Dawn Avenue.

The deal is critical to the ministry's precarious financial health. Each apartment Greenlaw builds would knock $20,000 off the price the ministry pays to get back the cathedral and its core buildings. In an example cited in court papers, 400 apartments would reduce the repurchase price by $8 million.

The ministry appears ready to give up the Family Life Center, the four-story home of the "Hour of Power" on Chapman Avenue. While its deal with Greenlaw allows it to lease the cathedral and other core church buildings from Greenlaw for 15 years, the lease on the Family Life Center would run only two years – and Greenlaw could terminate that lease early if it finds new tenants.

Greenlaw plans to buy the Family Life Center for $16 million and the cathedral and core church buildings for $30 million.

The family of founding Rev. Robert H. Schuller would give up some of its financial power over the cathedral to an independent board. Although the elder Schuller and his wife, Arvella, would sit on that board, an executive board controlled by outsiders would set the ministry's budget and would also appoint the chief financial officer.

In addition, the bankruptcy plan limits the salary of the ministry's chief executive officer, Schuller's daughter, Sheila Schuller Coleman, to $69,525 a year.

The church owes about $7.5 million to unsecured creditors including many longtime vendors who provided services for its annual Christmas and Easter pageants. Church administrators say the cathedral will continue its local worship services, community outreach programs and its weekly "Hour of Power" broadcasts. Also, the plan will immediately eliminate both the church's mortgage and the majority of its vendor debt, they say. Any remaining vendor debt will be repaid over the next 42 months, officials say.

The Crystal Cathedral over the past three years has been torn apart by a family feud that saw the exit of the founder's son, Robert A. Schuller. In the year leading up to its bankruptcy filing Oct. 18, the church sold many of its assets, cut about 150 of its staff members and slashed air time by 50 percent. Its congregation has shrunk to fewer than 5,000.

The cathedral's court filings' blame its financial troubles partly on "unsettled leadership" but mostly on the recession.

However, a financial statement filed Friday shows that the ministry's losses predate the recession. The ministry lost $6.4 million in 2006, a prosperous year for most Orange County businesses and nonprofits, an additional $7 million in 2007, $11.5 million in 2008 and $8.6 million in 2009. It managed a $141,000 surplus in 2010.

By then, however, donations were falling faster than the church could cut expenses. Donations fell by 24 percent in 2009.

Court filing also showed that during this time, a total of $832,940 in housing allowances were handed out to the families of all five children of Robert H. Schuller and a few top executives. More than $2 million was paid to 23 insiders, mostly family members of the Schullers, over the 12 months leading to the bankruptcy filing.

The church owes money to about 550 creditors. Among the unsecured creditors are vendors who provided their services to the megachurch's popular "Glory of Christmas" and "Glory of Easter" pageants – both of which have been suspended as a result of the church's financial troubles. The cathedral lost $16.8 million over three years on total revenues of $70.8 million.

The mortgage includes the cost of two more buildings on campus – the Family Life Center and Welcoming Center – that were added in 1990 and 2003, respectively. The mortgage also covers the cost of other refurbishments on campus and a parking lot expansion, as well as funds to acquire neighboring properties.

The glass panes of the landmark Crystal Cathedral in Garden Grove, Calif. reflect the rain clouds of a storm that hit Orange County. Crystal Catherdral Crystal Cathedral Ministries, the megachurch founded by television evangelist Robert H. Schuller, filed for Chapter 11 bankruptcy Monday.The cathedral owes about about $7.5 million to unsecured creditors. The bankruptcy filing seeks court protection from its creditors. LEONARD ORTIZ, THE ORANGE COUNTY REGISTER
As many as 400 apartment units along Lewis Street and Dawn Avenue are part of the plan.
The glass panes of the landmark Crystal Cathedral in Garden Grove, Calif. reflect the rain clouds of a storm that hit Orange County. Crystal Catherdral Crystal Cathedral Ministries, the megachurch founded by television evangelist Robert H. Schuller, filed for Chapter 11 bankruptcy Monday.The cathedral owes about about $7.5 million to unsecured creditors. The bankruptcy filing seeks court protection from its creditors. Pictured, from left, The Tower Chapel, the Crystal Catherdral, the Spire and Prayer Chapel. LEONARD ORTIZ, THE ORANGE COUNTY REGISTER
The glass panes of the Crystal Cathedral in Garden Grove, Calif. reflects the image of the Spire and Prayer Chapel built in 1990. LEONARD ORTIZ, THE ORANGE COUNTY REGISTER
Congregants go up to the alter to take a nail as a reminder of sacrifice and to greet Sheila Schuller Coleman pictured on the screen at right. ANA VENEGAS, THE ORANGE COUNTY REGISTER
The owners of Crystal Cathedral in Garden Grove filed for bankruptcy on Monday. Revenues are down due to the recession, Sheila Schuller Coleman, senior pastor, said. ROSE PALMISANO, THE ORANGE COUNTY REGISTER
The sun reflects off the main tower at Crystal Cathedral on Sunday. ANA VENEGAS, THE ORANGE COUNTY REGISTER
The owners of Crystal Cathedral in Garden Grove filed for bankruptcy on Monday. Revenues are down due to the recession, Sheila Schuller Coleman, senior pastor, said. ROSE PALMISANO, THE ORANGE COUNTY REGISTER
A sculpture of Moses and the ten commandment tablets silhouette against the sky at Crystal Cathedral Sunday. ANA VENEGAS, THE ORANGE COUNTY REGISTER
A sermon by Sheila Schuller Coleman on Sunday addressed the issue of the church's bankruptcy. ANA VENEGAS, THE ORANGE COUNTY REGISTER

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